(Bloomberg) —
Northam Platinum Holdings Ltd. made an unsolicited approach to buy some or all of Royal Bafokeng Platinum Ltd., signaling a bidding war for the South African platinum miner.
The approach comes after Impala Platinum Holdings Ltd. last month revived its pursuit of Royal Bafokeng, seeking control of the smaller producer known as RBPlat, which is key to prolonging the life of its own deep-level operations. Earlier in November, Northam had swooped to buy out RBPlat’s biggest shareholder, thwarting Implats’ initial approach.
“The Northam unsolicited approach does not contain any details as regards the timing or the commercial and financial terms of a possible offer,” RBPlat said in a statement on Thursday.
RBPlat said it’s considering Northam’s request to perform due diligence on the same basis as that undertaken by Implats. Talks with Northam over a possible offer ended after its board rejected a non-binding offer letter dated Oct. 11, RBPlat said.
On Nov. 29, Implats offered 150 rand in cash and shares to RBPlat shareholders, valuing the company at about 43.4 billion rand ($2.7 billion). That came after Northam agreed to pay 180 rand a share for a 32.8% stake in RBPlat.
“Our offer remains the only offer available to RBPlat shareholders with continued uncertainty whether Northam will or will not make an offer in the fullness of time,” Implats spokesman Johan Theron said in a statement. “We remain confident that we offer compelling value to all RBPlat shareholder and the broader economy as a consequence of the significant synergies that can be unlocked through closer cooperation between our two operations.”
Northam would be required to also pay 180 rand a share to other RBPlat investors if it makes a general offer within six months, RMB Morgan Stanley analysts said in a note. The general offer would be triggered if its RBPlat holding rises above 35%.
South Africa’s Public Investment Corp., Africa’s largest money manager which is also one of the largest investors in Implats and RBPlat, would support “any transaction that can demonstrate benefits for its clients,” a spokesman said.
RBPlat shares climbed 1.7% to 156.65 rand as of 4:39 p.m. in Johannesburg trading. Implats said on Wednesday that it owned 32.26% of RBPlat shares. Northam has raised its holding 34.95%, and said on Tuesday that it has options to increase that stake to 38.27%. Northam fell 4.6%.
Operational Synergies
Implats has long wanted to own RBPlat’s low-cost mechanized assets, which are key to prolonging life of its own operations in the Rustenburg mining complex. The miner could raise its offer to counter one from Northam, said Rene Hochreiter, an analyst with Noah Capital Markets Ltd.
“Its going to be who comes up with the best offer,” Hochreiter said. “Northam is going to have to make it a cash offer because Implats is going to come up with a cash offer.”
The potential synergies between RBPlat and Northam are less compelling than those with Implats, said Shane Watkins, chief investment officer at All Weather Capital Ltd.
“The risk is that Northam overpays given their lack of mining synergies with the Royal Bafokeng assets,” Watkins said. “Their mines are not adjacent to each other.”
Northam spokesman Leon Van Schalkwyk didn’t respond to calls seeking comment.
Northam’s bid for the stake owned by Royal Bafokeng Holdings — the investment arm of the Bafokeng nation that’s led by King Kgosi Leruo Molotlegi and his advisers — reflected the growth ambitions of Chief Executive Officer Paul Dunne.
(Updates with Implats comments in the sixth paragraph, Public Investment Corp.’s in the eighth.)
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
